Lordstown Motors, committee respond to Foxconn’s dismissal motion

By Sarah Lizee

Olympia, Wash., Aug. 22 – Lordstown Motors Corp. and its official committee of unsecured creditors responded to a motion for dismissal of the Chapter 11 case from shareholder and former partner Foxconn, according to documents filed with the U.S. Bankruptcy Court for the District of Delaware.

Foxconn argues that the petitions were filed in bad faith and without a valid bankruptcy purpose, and the debtors are suffering substantial and continuing loss with no prospect of rehabilitation.

If the case is not dismissed, it should be converted, Foxconn said.

In an objection filed Aug. 21, Lordstown said the motion is an attempt by Foxconn to avoid the consequences of its actions that contributed directly to the company’s demise, and to undermine the debtors’ efforts to maximize the value of their estates for the benefit of all stakeholders.

Lordstown said that when it began its partnership with Foxconn two years ago, it pivoted its entire business model to one based on collaboration with Foxconn.

The partnership was to include critical funding and Foxconn’s commitment to bring its expertise and global supply chain capabilities, but Foxconn failed to deliver on those promises, Lordstown said.

Lordstown said that with no viable stand-alone business model, its best option was to seek Chapter 11 protection to sell its assets, stay significant pending litigation and claims against the company and liquidate all claims in a centralized forum, and reduce costs and minimize operating cash burn.

“Rather than support these goals, or at least stay out of the way, Foxconn has worked to undermine them,” Lordstown said in its objection.

“Foxconn filed the motion to take away the benefits and protections of Chapter 11, disrupt the debtors’ sale process, and cause the debtors to spend more time and money litigating.

“None of this maximizes the value of the debtors’ estates, benefits stakeholders (except perhaps Foxconn), or is otherwise productive.”

The unsecured creditors committee said in a statement filed Tuesday that, while it has its concerns about the debtors remaining in Chapter 11, it expects the debtors to negotiate in good faith to formulate a plan that pays unsecured creditors in full and ensures their participation throughout the process.

The debtors have assured the committee that a plan will be filed and prosecuted quickly in order to reduce the administrative burn rate and that the plan will get distributions to creditors as quickly as possible, the committee said.

A hearing is scheduled for Aug. 28.

The Lordstown, Ohio-based electric vehicle maker filed Chapter 11 bankruptcy on June 27 under case number 23-10831.

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